July 14 Sources: China's Speedbumps

Trends do not continue. That is what makes predicting the future so tough. Remember when Japan was going to surpass the U.S.? Now China is the country of the future. Someday that may happen, but a couple of sources this week - “Broken China” and “Good Capitalism, Bad Capitalism” - show why this may not be as close as we now anticipate.

"Broken China" talks about some of the big problems that the corrupt communist authorities just cannot solve. "Good Capitalism, Bad Capitalism has a more generic explanation". It is relatively easy for a country with a strong government to begin to catch up with more advanced states because they can copy and adapt the best technologies and methods. Even the benighted Soviet Union was able to do that for a while. But the more they catch up, the harder it gets, When get near the lead themselves, they can no longer copy and adapt, but must innovate and improve. Each unit of growth gets harder.

This is the concept of the benefits or borrowing and the penalty of taking the lead. It is an old concept. Thorstein Veblen identified this same rapid growth trend in Imperial Germany. It applied to Germany, the Soviet Union, Japan & now China.

In any case, sources follow:

Energy & Environment

Green War over Carbon Trading - Neo-liberal environmentalists are selling carbon offsets as a pain-free way to save the planet from global warming. But it is not that easy.

Live Earth's Inconvenient Truths

The "Cotton Problem" in West and Central Africa - Cotton subsidies have received considerable attention during the past four years, primarily triggered by the excessive government support received by the cotton sectors in the United States and the European Union.

The Wrong Fire - With all the expensive proposals to combat global warming no one is discussing reducing global carbon emissions by putting out mine fires.

The Complex Climate Change Incentives of China and the United States - Perhaps the world would be better off with an international agreement to control greenhouse gas emissions. But the incentives of the world’s leading emitters--the U.S. and China—are complex, and do not necessarily favor participation in such an agreement.

Perennial Polyculture Farming: Seeds of Another Agricultural Revolution? - Reversing environmental degradation, redressing the loss of biodiversity, and reducing worldwide hunger, malnutrition, and energy use.

Water Trading--A Means to Improve the Quantity and Quality - A discussion of world water markets and various countries' water policies.

Fishing for a Secure Future - Fish provide sustenance for billions of people in the developing world, yet many fisheries are poorly run and neglected. An Environmental Change and Security Program multi-part series examined the problems and potential of fisheries.

Global energy supplies tighten - A report released Monday by the International Energy Agency forecasts a continued squeeze of the global oil and gas markets in the coming years, due to tighter supplies coupled with increased demand. Against this backdrop, a new Quarterly chart pack shows that growth in demand can be cut in half or more over the next 15 years—without reducing the benefits end users enjoy.

Africa's Oil and Gas Sector: Implications for U.S. Policy - Development and transformation of Africa's energy sector presents a unique opportunity for cooperation between African countries and energy consumers, particularly since Africa is geographically closer to the U.S. and safer than the Middle East; but to attract scarce private global capital, the investment climate must be improved, and significant political and economic hurdles must be overcome.

Who Recycles? - While an impressive three-quarters (77%) of American adults recycle something in their own home, one-quarter (23%) still recycle nothing at all. One may think that the younger generation is the one most likely to recycle, but this is not the case.

U.S. Politics and Society

Dispelling Misconceptions: Guantanamo Bay Detainee Procedures Exceed the Requirements of the U.S. Constitution, U.S. Law, and Customary International Law - Contrary to the claims of the Bush Administration's critics, the detainees held at Guantanamo actually receive the most systematic and extensive procedural protections afforded to foreign enemy combatants in the history of armed conflict

Campaign 2008

The GOP's Dark Cloud - The outlook for the GOP is gloomy for both the 2008 presidential and congressional elections.

Campaign Internet Videos: "Sopranos" Spoof vs. "Obama Girl" - They originate on the internet, but more people are viewing them on TV than online.

Public Diplomacy for Dummies - To say public diplomacy hasn't been this administration's forte is a truism and an understatement.

Numbers: Party Lines, Women's Progress, and More - A brief analysis of current public opinion on political parties, women's progress in the workplace, and more.

Fewer Mothers Prefer Full-Time Work - In the span of the past decade, full-time work outside the home has lost some of its appeal to mothers. This trend holds for both those who have such jobs and those who don't.

The Political Gender Gap - The Democrats' insistence on giving women more freedom seems not to accord with the opinions of actual American women.

Which Words Are Offensive? - At the National Association for the Advancement of Colored People’s 98th annual convention this week, a burial was held. It was symbolic, but, nevertheless, the infamous ‘n-word’ was declared to be buried.

Abolish the SAT - The SAT is an unnecessary and socio-economically divisive institution. We should drop it in favor of achievement tests.

Michigan Higher Education - There is little evidence that spending more on higher education stimulates economic growth.

A Brief Review Forty Years after the War on Poverty - We have made progress in the forty years since the War on Poverty, but we must address more issues to help the African-American community.

Mid-Session Budget Review Shows Surging Tax Revenues - Though a rapid increase in federal revenues shows that the 2003 tax cuts have succeeded in boosting economic activity, the entitlement spending tsunami still threatens America's future.

A Stillness in the Senate - The Senate's failure to pass legislation on immigration and other issues is unacceptable.

Visa Waiver Reform: The Heritage Foundation's Research - Restricting casual travel with many countries that seek stronger ties to America has hurt the U.S. economy, diminished America's image abroad, and actually foreclosed one method of encouraging friends and allies to adopt stronger security procedures.

Foreign Policy & Security

Broken China - Beijing can't clean up the environment, rein in stock speculation, or police its companies. Why the mainland's problems could keep it from becoming the next superpower

Too Many People? - There is no clear evidence to support the trendy fear that global population increases are out of control and need to be "stabilized."

The Geopolitics of Global Population Change - Much attention is given to the dangers associated with runaway population growth, from environmental degradation to unrelenting cycles of poverty but the stunning collapse in fertility rates across the world is the biggest – and perhaps least reported – demographic story of the past few decades.

U.S.-China Relations After Resolution of Taiwan’s Status - Identifies the principal pathways by which Taiwan’s status might be resolved and analyzes the likely impact on U.S.–China relations.

Seven Questions: Can You Live Without China? - Is it possible to go for a whole year without buying any products made in China?

U.S. Policy and Pakistan's Nuclear Weapons: Containing Threats and Encouraging Regional Security - U.S. policy should center on helping to prevent the penetration of the nuclear establishment over time by individuals sympathetic to al-Qaeda goals.

Nuclear Friends in Need - Increasing business and education ties between India and the US lead to shared foreign-policy interests.

Will Turkey Have an Islamist President? - The possibility of an Islamist president in Turkey threatens to destroy the secularist status quo there.

Islam vs. Islamists: Voices from the Muslim Center - This documentary tells the story of courageous moderate Muslims in the United States, Western Europe, and Canada who are taking on adherents to the radical extremist ideology known as Islamism.

Ahmadinejobless - Iran’s radical president is sinking fast, and he knows it. Only one man who can keep Ahmadinejad out of the unemployment line: George W. Bush.

Measuring Progress in Iraq - Counterinsurgency and stabilization operations like the ones in Iraq are complex. How do we measure progress?

Baghdad Surge - The "surge" in U.S. forces was meant to slow the paralyzing cycle of violence threatening to engulf Iraq, but determining how effective the troop buildup has been is more an art than a science.

Why Was the Iraqi Resistance to the Coalition Invasion So Weak? - Research brief summarizes an analysis of information derived from interviews with former senior Iraqi officials to determine factors contributing to the rapid collapse of Iraqi resistance to the Coalition invasion of Iraq in March and April 2003.

A Mixed Picture from Iraq- A new administration "progress report" on the war in Iraq presents a decidedly mixed picture, prompting optimism from President Bush and the House to pass legislation that would begin a withdrawal in April.

What Model Should Iraq Follow after U.S. Forces Withdraw? - Even as they disagree on how long American forces will remain in Iraq, U.S. officials and foreign policy experts suggest a number of scenarios for what Iraq might resemble after coalition forces eventually pull out.

Iraq and the Surging Election Cycle - At a time of some high-profile Republican challenges to Iraq policy, the Bush administration is bracing for a new wave of legislative pressure over Iraq before Congress recesses in August.

Posted by Jack at July 14, 2007 10:23 PM
Comment #226376

At the risk of starting another ad nauseum thread about Al Gore, I’ll just say AEI’s “Green War” article makes no attempt at fairness. Gore proposes a number of ways to deal with climate change — offsets are just one. He has long supported a carbon tax. And, yes, he does own a large home, which doubles as an office. He purchases wind- and solar-generated electricity and methane gas. But of course this is just an ad hominem attack, anyway, designed to distract.

The Cato piece on climate change is polemic hack work that doesn’t even get its facts straight. For example, it claims the IPCC says anthropogenic warming change is “likely” (66 percent confidence level) when in fact the IPCC says it is “very likely” (90 percent, see page 10). Apparently the Cato author had in mind continental temperatures instead of global ones (ocean, land, atmosphere, etc). Because this was a highly opionated hack piece, the author wasn’t concerned with properly handling the evidence.

Anyway, that’s as far as I got. I really dislike Think Tanks, whether of the left, right, or middle, because they are often polemic in nature, and can’t be trusted. For a real laugh, read any Heritage Foundation piece on energy. Any group that requires you to have a correct opinion and expects “research” to support that opinion is just silly.

Posted by: Gerrold at July 14, 2007 11:58 PM
Comment #226377

Jack, you’re exactly right about China. I’ve seen forecasts that say that at present rates of growth for both the US and Chinese economy, the Chinese, with an annual growth rate of 9.5%, would catch up in 2031. Sustaining growth like that over decades is all but impossible, however, because the larger their economy becomes, the greater the factors that will inhibit growth.

It’s unthinkable, for example, that as the vast Chinese population grows more affluent, they will not start consuming more of their own products and imports, which will diminish their trade imbalance with other nations. They will need to spend much more on social programs and government services on par with their Western counterparts, and in general, China cannot remain immune forever from the factors that depress growth in modern industrialized societies. And the closer they are to parity with the United States, the greater the necessity will be to innovate technologically instead of just borrow ideas (and in many cases steal without compensation, as is happening today with China’s widespread violations of tech-licensing and intellectual property laws.)

In any case, it’s probable that China really will catch up someday—but in 75 or 100 years instead of 20 or 30.

And by then, it’s likely that nobody will notice or care because globalization of the world economy will have us all so mixed up together that national economies will supply provide interesting statistics, but for all practical purposes be an artifact of the past.

Posted by: Loyal Opposition at July 15, 2007 12:02 AM
Comment #226380


I disagree with the article re climate change too. I include it because it is part of a debate. Attacking the climate change idea on a statistical technicality shows the weakness of the argument. But I do believe some people BELIEVE this argument.

Even among those of us who accept global warming, there is lots of disagreement about what it means. Gore uses worst case scenarios. I think that is also a bit dishonest.

Re offsets, they are just BS. You could have offsets by large industries, although even there dishonestly and mendacity is rampant, but for individuals it is just silly.

Posted by: Jack at July 15, 2007 12:25 AM
Comment #226383


I think offsets on an individual level, at least, are BS, too. Go ahead and plant the trees or pay someone else to plant ‘em, but don’t try to calculate how it affects your carbon footprint. It seems that would be a disincentive to, for instance, drive less.

The only possible advantage I can see is that it might get people thinking about their carbon usage. That would be a good.

Posted by: Gerrold at July 15, 2007 12:39 AM
Comment #226400


With China, I am in the happy position of knowing what I am talking about.

China is indeed quite polluted. If you look at any list of the most polluted cities on earth, Chinese cities will crowd the top of the list. The last time I visited, I was constantly thinking that the Chinese should put more of a premium on protecting their environment and less on growth. Of course, it is easy for me to say because I am not a starving peasant.

My impression is that the Chinese are actually fairly content with their government. Their lifestyle is improving by leaps and bounds. Compared to the material gains they are making, democracy is a vague, theoretical construct.

I have read some vague reports of “rural unrest”, but I doubt it will escalate into anything serious. The Chinese have had enough of political turmoil.

By the way, no one should be foolled by the name “Communist”. They are an authoritarian capitalist country. You could argue that they are more capitalistic than we are. As the article notes, they have little in the way of regulation.

In summary, China has problems but I think that people are contented enough that Beijing will be able to keep a handle on things for decades to come.

Posted by: Woody Mena at July 15, 2007 9:00 AM
Comment #226406


It is not a matter of their being contented or not. It is the simple matter of the relative ease of catching up and the difficulty of actually taking the lead. This was the case with Germany, Japan, Soviet Union and argueably the U.S. in the 19th century.

My point is not that China will crash. Japan did not crash. But each growth point will become more difficult when they get past the easy part.

As for the environment, no matter if people are content or not, at some point you face an environmental collapse. We argue in the U.S. that good environmetal policy makes economic sense and we are right. This does not mean the Greenpeace vision, but it does mean that a country needs a reasonably clean environment. AND the richer a country becomes the more people demand.

The other point (drawn from the Book Good Capitalims, Bad Capitalism) is that the Chinese communists are no longer really communists. If they were, it would not be able to have developed as they have. But they are inefficient and authoritarian. This works at their current stage of development, but it lacks the ability to adapt and innovate that they will need for the next stage.

So I guess the bottom line is that China has made great progress. By pulling their own weight, they have done more to reduce global poverty than anybody else in the last decades. But they cannot long continue with the strategy that brought them all this success, just like the growing teenager cannot do the same things when he becomes a successful 35 year old.

Posted by: Jack at July 15, 2007 10:14 AM
Comment #226430


I agree that China’s current rate of growth is unsustainable. China doesn’t have the natural resources — heck, the WORLD doesn’t have the natural resources.

For the past 25 years of so, the Beijing government has been pretty pragmatic and willing to adapt. Hopefully they will start taking care of the environment, look at food safety, etc. They seem to be willing to try anything that doesn’t directly threaten their power, like let people start political parties.

Posted by: Woody Mena at July 15, 2007 1:25 PM
Comment #226440

Thanks for the link about mine fires. Interesting stuff. Hard to imagine flooding does not work well. Maybe that is a good place to dump sequestered co2? Too bad the authors chose to adopt an either or outlook,ie.If we put out the fires we do not have to improve fuel efficiency etc.,Detroit will go broke if they have to make efficient cars crap,this dispite other makers already exceeding the proposed standards and making big bucks doing it.It would be nice to find out more mine fire info without the oil company propaganda slant.

My late father-in-law was a MIC engineer and arch conservative. He was a top notch engineer,heading the design team for the Blackbird etc. He once noted that the Chinese were not capable of original design and asked retorically what had they ever invented on their own. My reply left him sputtering when I pointed out,printing,gunpowder,and pasta. Point is we would be wise not to underestimate China and its diplomatic methods. In the Philippines they are giving a railroad pretty much without strings. We ,on the other hand,through the World Bank and IMF insist on a high VAT and privatization of things like the Manilla Water Dept.The results are sure to be an increase of Chinese influence globally with a corresponding decrease of Western influence.

Posted by: BillS at July 15, 2007 2:23 PM
Comment #226451


I am a bit cynical about giving things away. Nobody on earth or the history of the earth gives more than the U.S. I know they always criticize us because of % of GDP, but our GDP is so big that it more than swamps everybody else. What does that “buy” us? At first people are grateful, but they soon come to expect it and then resent it.

I do not underestimate China, but we need not overestimate them either. They produced many of those innovations you mention, but they sometimes were unable to take full advantage of them. When most of the innovations people mention are hundreds of years ago, you have to wonder.

China is an important place and will be more important, but the time of easy catch up will come to a close sooner than they think. Wait until that RR starts having quality and mechanical problems. ALL things do and people quickly forget the favor.

Posted by: Jack at July 15, 2007 4:01 PM
Comment #226472

Jack, your article begins with prima facia false statement right off the bat. Many trends DO continue until something breaks.

There was a trend toward undermining Communism that began in the 1940’s and that trended lasted right through to the end of the Cold War and dissolution of the USSR. Politicians like Dwight D. Eisenhower warned of not only the military industrial complex, but, that one day, deficits here and deficits there, would one day reach enormous national debt proportions. That trend is continuing still today as we are now only 113 billion dollars, or several months of Iraq war spending, away from a NINE TRILLION DOLLAR national debt. Remember, the debt was 5.65 trillion and going down, when Bush took office.

So, the fact is, some trends do continue until the system supporting it collapses or people decide to change the trend’s course. Back in the 1970’s a trend began which continues today, namely the amount of weekly work hours it takes to remain in the middle class. Back in the mid-1960’s a single blue collar wage earner like a welder at Ford Motor Co, could afford a middle class lifestyle for his family, and on 40 hours per week work. Today, it takes nearly 80 hours work per week to stay in the Middle class, meaning Moms can no longer afford to raise the kids, but, must become a 2nd wage earner if staying in the middle class is a goal. And the social costs of absentee parents during children’s upbringing is enormous.

Trends: some don’t continue, some do until something horrible breaks under the weight of that trend gone too far. We are witnessing the trend of money in politics growth trend headed for disastrous results in the next decade or two, as corruption of our government and political system by a small number of wealthy special interests continues unabated.

Posted by: David R. Remer at July 15, 2007 6:56 PM
Comment #226499


Trends that are seen to continue are usually PAST trends and then people are giving themselves the benefit of the doubt. Nobody predicted the fall of communism (except maybe RR) before the late 1980s. Most experts didn’t even see it coming in 1989. The “trend” was increasing power for the communists and the decline of the USA. That was not the case.

The middle class lifestyle has upgraded. With a single median income, you an still afford that same house square footage you had in 1970. It is just that now we demand more. You could still have that one car of similar reliablity. Of course you would not have a big screen TV, computer or DVD. Nobody had them back then. The trend that continued was for people to want more.

You also have to count all the work people did. Labor saving devices have given us more, not less leisure time. That car you owned in 1970 was unreliable. It required frequent work. My Honda requires nothing but gas and an oil change at more than 5000 miles. My middle class mother washed dishes by hand. Today virtually every middle class home has a dishwasher. Our washing machine had a wringer. She had to wash the hard stains by hand and then iron. I never iron my shirts. They do not need it. They are wringle free and they REALLY are. My middle class parents spent many hours ironing.

We work more in paid work; but we do not work more in general.

Another thing that is different. In my middle class neighborhood, nobody took vacations much farther than 100 miles from home. Today, working class peoople can expect to vacation in Las Vegas, Florida, even Europe or Hawaii. It is just a really different world.

Re my original statement - if trends continued prediction would be easy. Many people claim to have predicted the past, but their success in investments, relationships and career choices indicates they were mistaken.

Posted by: Jack at July 15, 2007 11:21 PM
Comment #226512


Just how do you define working class?

Let’s say a couple works at Walmart they each make $8 an hour. You can do the math — they aren’t going to vacation in Paris.

Posted by: Woody Mena at July 16, 2007 7:43 AM
Comment #226575

Jack, a trend has a history by definition. Duh!

And there is a huge correlation between both ignorance and lack of logical prescience, and the unexpected. Outspending the Russians was neither ignorance nor lack of prescience. It was a lack of sound data and information regarding the resources of the USSR. We did not have, and could not obtain, reliable intelligence on their economic condition. Hence, the unexpected end to the trend of USSR sponsored communism throughout the world.

The fact is, that trend would have continued if the USSR had an economic base that could have supported it. These are now historical facts, and bear little relation to whether or not trends are trends.

The American working family has lost nearly double their real wages since the 1960’s, and this trend is continuing. It will continue until either the economy built on the great middle class collapses or voters force government to reverse this trend, assuming politicians could figure out how to in the first place.

Sure, the commodity basket that defines middle class has changed since the 1960’s, but, that has no bearing on the fact that it now takes nearly two wage earners to support middle class life compared to the wage earner in the 1960’s.

All trends will end when the Sun goes red giant. But, such a statement hardly supports your proposition that all trends end. We have many which continue today. And many of them undesirable. The issue is what can be done to halt or reverse them, like our growing national debt or 3/4 trillion annual trade deficit.

Posted by: David R. Remer at July 16, 2007 5:56 PM
Comment #226605


I have been studying up on decision making for a long time. We may disagree, but I have seen little that convinces me that anybody can project much of anything more than a few years out. Historians kind of trick us because the create patterns. NOT find them, create them. They make sense of many random events and conflicting decisions are make it seem like a story.

Our intelligence about the USSR was not necessarily wrong. Communism was a very stupid ideology, but stupid ideologies have maintained themselves and sometimes won. An informed observer would have given the USSR little chance of survivial in 1941. Military experts estimated that the Polish army was stronger in 1939 and Stalin’s purges had decapitated his military. Yet it survived and everybody claimed they saw it comming.

I have been personally close to some historical events. I have never seen one really well handled by historians. If we ever get to talk personally, I will tell you some funny stories.

Re wage earners - we have had many advances. With the median wage, you certainly can buy more of almost everything than you could in 1960. We just have become so rich, we take it for granted. How many hours would a worker have needed to work to buy the color TV I have now? A car from today is much more reliable and cheaper for the quality. I wear a $20 casio watch that keeps better time than the finest watch of 1960. Even the richest person in the U.S. could not have a pair of shoes better than my Nike running shoes. Long distance calls are virtually free. I still recall when it was a big deal to get a call from across the state. The median American home is 33% bigger than it was back then. Most people have air conditioning; almost nobody did in 1960.

We cannot just ignore all the progress and just say people are worse off because they do not have all they want. Back in 1960, rich people had reliable cars, air conditioning, home theatres etc. Now ordinary people do too.

Yes, except for all the fantastic progress, we are no better off. Besides that, Mrs. Lincoln, how was the play?

Posted by: jack at July 16, 2007 9:06 PM
Comment #226646

Jack, now you are getting deeply philosophical, when you say: “Historians kind of trick us because the create patterns. NOT find them, create them.”

As in the patterns in the universe only exist because of our senses which have evolved to create them. Without our senses, there would be no patterns to detect. Sorry, I just can’t take your argument seriously. I provided you with concrete examples of trends underway for decades and you dismiss them as never having been brought up in order to continue with your argument and justify your perceptions which the factual record I presented would burst.

Just doesn’t make for honest or productive debate.

The middle class is the middle class whether in 1960 with one basket of goods and services or today with another and bigger basket of goods and services. To fall out of the Middle Class into the poor class is not relative, Jack, it is damned scary to Middle Class parents struggling to give their children as good or better a future than they had as young adults. Discount that fact all you need to sustain your perceptions, but, your argument rings hollow in ignoring it.

Posted by: David R. Remer at July 17, 2007 3:10 AM
Comment #226654


Re predictions, the reason I believe in the market is because I am convinced that “experts” cannot either predict or react as well as the dispersed decision making and information gathering of the people. I am not meaning historians seeking patterns in the metatphysical case. It is just that there are many factors going on. The historian chooses those that fit his story.

Think of the Great Depression stock market crash myth. How did the stock market crash CAUSE the depression? It did not. It was in some respects a symptom and in some respects nothing at all. But it was a big deal, so it gets the blame. The real causes are too complex.

RE middle class - like you, I remember the 1960s. We were working class. My father had a good union job. We were not poor, but I remember the things we DID NOT have. We wore our shoes until they had holes and then put in cardboard. We did not own a car. Our family home was small with one bathroom for a family of five. Of course we had a black and white TV and did not have any of those things of more recent development, such as computers, DVDs, big screen TVs etc. We also had no air conditioning.

Anybody living in those conditions today would be considered poor, not lower middle class.

The basket of good is bigger and better today. And the relative positions are the same. Half the families make less than the median; half more.

What has happened is the devaluation of unskilled labor. As the workforce skills have increased, those unskilled workers have suffered. There are fewer of them as a % of population and you cannot focus on them and think of them as holding the same place in society as they did in 1960. My father was a HS drop out. He was “normal” for his family and times. I am his equivelent today - a college graduate. The whole society has moved up in skill and wealth.

Yes, the family now living in my family’s old home is poor. Actually, they have about as much as we did. But most others have moved up.

Posted by: Jack at July 17, 2007 8:07 AM
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